In November 2019, the IRS released Revenue Procedure 2019-44 (PDF) and Notice 2019-59 (PDF), which detail the tax changes and inflation adjustments for 2020.
Once again, we’ve summarized a few which we feel will have the broadest impact:
| STANDARD DEDUCTION |
|
2019 |
2020 |
Change |
| Married Filing Jointly1 |
$24,400 |
$24,800 |
$400 |
| Single2 and Married Filing Separately1 |
$12,200 |
$12,400 |
$200 |
| Head of Household2 |
$18,350 |
$18,650 |
$300 |
1 A married filer who is blind or over age 65 can claim an additional $1,300. Two married filers who are both over age 65 or blind can claim $2,600, unchanged from 2019.
2 Single or head of household filers who are blind or over age 65 can claim an additional $1,650 standard deduction, up $50 from 2019.
| ESTATE & GIFT TAX |
|
2019 |
2020 |
Change |
| Annual Exclusion Gifts |
$15,000 |
$15,000 |
No Change |
| Estate and Gift Tax Basic Exclusion |
$11,400,000 |
$11,580,000 |
$180,000 |
| Generation Skipping Exemption |
$11,400,000 |
$11,580,000 |
$180,000 |
| CONTRIBUTION LIMITS1 |
|
2019 |
2020 |
Change |
| Traditional and Roth IRA |
$6,000 |
$6,000 |
No change |
| IRA Catch-up Limit2 |
$1,000 |
$1,000 |
No change |
| Elective Deferral Plans2,3 |
$19,000 |
$19,500 |
$500 |
| Elective Deferral Plan Catch-up Limit2 |
$6,000 |
$6,500 |
$500 |
1 Check with your advisor for the limits applicable to SEP, SIMPLE, and defined contribution plans.
2 Catch-up contributions are available for anyone over age 50
3 Elective deferral plans include 401(k) plans, 403(b) plans, most 457 plans, and Thrift Savings plans
| AGI PHASE-OUTS |
| Roth IRA Contribution |
2019 |
2020 |
Change |
| Single/Head of Household |
$122,000-$137,000 |
$124,000-$139,000 |
$2,000 |
| Married Filing Joint |
$193,000-$203,000 |
$196,000-$206,000 |
$3,000 |
| AGI PHASE-OUTS |
| Deductible IRA Contribution |
2019 |
2020 |
Change |
| Single/Head of Household |
$64,000-$74,000 |
$65,000-$75,000 |
$1,000 |
| Married Filing Separate |
$0-$10,000 |
$0-$10,000 |
No change |
| Married Filing Joint (active spouse) |
$103,000-$123,000 |
$104,000-$124,000 |
$1,000 |
| Married Filing Joint (non-active spouse) |
$193,000-$203,000 |
$196,000-$206,000 |
$3,000 |
| OTHER ADJUSTMENTS |
|
2019 |
2020 |
Change |
| Long Term Capital Gains Rate brackets (married filing jointly) |
0% – up to $78,750
15% – up to $488,850
20% – $488,851 and above |
0% – up to $80,000
15% – up to $496,600
20% – $496,601 and above |
0% – $1,250
15% – $7,750
|
| Unearned Income Subject to Kiddie Tax |
Above $1,100 |
Above $1,100 |
No change |
| Health/Medical Savings Account contribution limit |
$3,500 (self only)
$7,000 (family) |
$3,550 (self only)
$7,100 (family) |
$50 (self only)
$100 (family) |
| Cafeteria plans (Flexible Spending Account) maximum contributions |
$2,700 |
$2,750 |
$50 |
| Adoption Credit for Qualified Expenses (phased out based on MAGI) |
$14,080 |
$14,300 |
$220 |
| Foreign Earned Income Exclusion |
$105,900 |
$107,600 |
$1,700 |
| Lifetime Learning Credit Joint Filer MAGI Threshold |
$116,000 |
$118,000 |
$2,000 |
| Limitation on Itemized Deductions |
None |
None |
No Change |
| Qualified Business Income (Section 199A) Deduction Threshold |
$315,000 married filing joint |
$326,600 married filing joint |
$11,600 |
| INCOME TAX BRACKETS |
| MARRIED FILING JOINTLY and SURVIVING SPOUSES |
|
2020 |
2020 Tax is This Amount Plus this Percentage |
Of the Amount Over |
| 10% |
Income up to $19,750 |
$0 plus 10% |
$0 |
| 12% |
$19,751 to $80,250 |
$1,975 plus 12% |
$19,750 |
| 22% |
$80,251 to $171,050 |
$9,235 plus 22% |
$80,250 |
| 24% |
$171,051 to $326,600 |
$29,211 plus 24% |
$171,050 |
| 32% |
$326,601 to $414,700 |
$66,543 plus 32% |
$326,600 |
| 35% |
$414,701 to $622,050 |
$94,735 plus 35% |
$414,700 |
| 37% |
Income over $622,051 |
$167,307.50 plus 37% |
$622,050 |
| INCOME TAX BRACKETS |
| SINGLE TAXPAYERS |
|
2020 |
2020 Tax is This Amount Plus this Percentage |
Of the Amount Over |
| 10% |
Income up to $9,875 |
$0 plus 10% |
$0 |
| 12% |
$9,876 to $40,125 |
$987.50 plus 12% |
$9,875 |
| 22% |
$40,126 to $85,525 |
$4,617.50 plus 22% |
$40,125 |
| 24% |
$85,526 to $163,300 |
$14,605.50 plus 24% |
$85,525 |
| 32% |
$163,301 to $207,350 |
$33,271.50 plus 32% |
$163,300 |
| 35% |
$207,351 to $518,400 |
$47,367.50 plus 35% |
$207,350 |
| 37% |
Income over $518,401 |
$156,235 plus 37% |
$518,400 |
There are many other cost-of-living adjustments for 2020 which may impact you. Review the Revenue Procedure 2019-44 and Notice 2019-59 and consult your CPA to see if there are others you need to be aware of for your specific situation.
This information is believed to be accurate but should not be used as specific investment or tax advice. You should always consult your tax professional or other advisors before acting on the ideas presented here.
In November 2019, the IRS released Revenue Procedure 2019-44 (PDF) and Notice 2019-59 (PDF), which detail the tax changes and inflation adjustments for 2020.
Once again, we’ve summarized a few which we feel will have the broadest impact:
1 A married filer who is blind or over age 65 can claim an additional $1,300. Two married filers who are both over age 65 or blind can claim $2,600, unchanged from 2019.
2 Single or head of household filers who are blind or over age 65 can claim an additional $1,650 standard deduction, up $50 from 2019.
1 Check with your advisor for the limits applicable to SEP, SIMPLE, and defined contribution plans.
2 Catch-up contributions are available for anyone over age 50
3 Elective deferral plans include 401(k) plans, 403(b) plans, most 457 plans, and Thrift Savings plans
0% – up to $78,750
15% – up to $488,850
20% – $488,851 and above
0% – up to $80,000
15% – up to $496,600
20% – $496,601 and above
0% – $1,250
15% – $7,750
$3,500 (self only)
$7,000 (family)
$3,550 (self only)
$7,100 (family)
$50 (self only)
$100 (family)
There are many other cost-of-living adjustments for 2020 which may impact you. Review the Revenue Procedure 2019-44 and Notice 2019-59 and consult your CPA to see if there are others you need to be aware of for your specific situation.
This information is believed to be accurate but should not be used as specific investment or tax advice. You should always consult your tax professional or other advisors before acting on the ideas presented here.
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